I read a post suggesting software to kick the phone out of recovery mode, something like Recboot, but not sure exactly. Try and search, you should find it since it hasn't been that long ago.
Try TinyUmbrella to kick it out of recovery. You will find that 4.2.1 was installed and the phone works. Check everything, because it might be a corrupted install.
I had the same issue and I tried tiny umbrella but that wouldn't. I used a different mac to restore my iphone4 to 4.2.1 and that did the trick. Hope that helps!
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How do i fix error 1013
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